MONTREAL — Montreal, Maine & Atlantic Railway is laying off employees on both sides of the border. A company spokesperson told The Gazette that it is letting go of an undetermined amount of U.S. employees in addition to the five Quebec employees it laid off Tuesday.

It’s the second round of layoffs in Quebec in the last month, and further indication of a company in financial turmoil. The downsizing was announced on the same day that the devastated town of Lac-Mégantic upped its estimate of cleanup costs to $7.7 million.

It also came a day after Quebec Environment Minister Yves-François Blanchet ordered MMA, as well as two fuel companies — World Fuel Services and its subsidiary Western Petroleum Company — the estimated cost of cleanup efforts incurred by the town and province. The town’s previous estimate had been $4 million.

Earlier Tuesday, before Lac-Mégantic announced that the cleanup cost had risen, MMA chairman Ed Burkhardt’s assistant, Cathy Aldana, told The Gazette that the company would discuss its financial obligations directly with town authorities, and a public statement would be unlikely. But later in the day, Aldana said she was unsure when the company would respond given the increased price tag.

Monday’s provincial order appeared to come as a surprise to World Fuel, which said in a statement Tuesday that “given that MMA and local authorities have assumed control and management of the site to date, and that MMA has assumed responsibility for the accident, we did not expect to be named in this or any similar government action ... We have serious objections to the legality of the order.”

In fact, the company, which acts as a middleman between drilling companies that extract the oil and refineries that turn the crude into a product, said that it has nothing to do with MMA, and therefore had nothing to do with the July 6 derailment in Lac-Mégantic.

“There is no relationship between the two companies, contractual or otherwise,” said a World Fuel spokesperson who spoke on condition of anonymity. “World Fuel contracted Canadian Pacific Railway for the transport of the trains carrying the crude from North Dakota to New Brunswick,” with CP subcontracting a portion of that trek to MMA, the spokesperson said.

When asked about the relationship between CP and MMA, a spokesperson refused to comment.

An employee of the Quebec chapter of the United Steelworkers union, which represents MMA workers in the province, said the laid-off employees had been informed of their terminations by phone, and the union had not been informed, which is unusual. The employee said that the five were a mix of conductors and maintenance workers, and the union is unaware of when the terminations would take effect.

Aldana said the layoffs are “temporary,” and due to the company’s main line being cut off after the derailment.

Aldana relayed a message from Burkhardt to The Gazette in reference to the U.S. layoffs, saying: “(We) are adjusting the workforce to the volume of traffic that we’re now experiencing, and it includes both Canada and the U.S.”

On July 16, the company let go of 19 employees, including two managers. The new total of 24 laid-off employees represents slightly less than one-third of MMA’s Quebec workforce.

Representatives from the Brotherhood of Locomotive Engineers and Trainmen, the union that represents MMA’s U.S. employees, did not respond to requests for comment.

While MMA has yet to respond to Quebec’s demand that it pay for Lac-Mégantic’s cleanup costs, Université Laval professor Daniel Gardner, an expert in liability claims, said it seems obvious to him that MMA would be held responsible. However, he explained that having reviewed the insurance policy that the company had bought from England’s XL Group, the policy clearly covers the damages of the sort seen in Lac-Mégantic. Only if the incident had occurred wilfully would there be grounds for the insurance company to not pay the damages, he explained.

“I read the contract and it’s quite clear that it covers this kind of accident,” he said. “The pollution risk, the bodily injury, the material damages are covered.”

Gardner said that in his understanding of the situation, it should be the insurance company paying for the damages, even should rumours that MMA is on the verge of bankruptcy prove true.

“Bankruptcy would not affect insurance coverage,” he said. “This is why you have to have insurance, in case you don’t have enough money to pay for the damages.”

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